Miserable by Design

By PAUL KRUGMAN

New York Times

October 3, 2005

Federal aid to victims of Hurricane Katrina is already faltering on two crucial fronts: health care and housing. Incompetence is part of the problem, but deeper political issues also play a crucial role.

Start with health care, where conservative senators, generally believed to be acting on behalf of the White House, have blocked bipartisan legislation that would provide all low-income victims of Katrina with health coverage under Medicaid.

In a letter urging Senate leaders to reject the bill, Mike Leavitt, the secretary of Health and Human Services, warned that it would create "a new Medicaid entitlement." He asserted that victims can be taken care of by Medicaid "waivers," which basically amount to giving refugees the health benefits, if any, that they would have been entitled to in their home states - and no more.

As the Center on Budget and Policy Priorities points out, many needy victims won't qualify for aid. For example, Medicaid doesn't cover childless adults of working age. In fact, surveys show that many destitute survivors of Katrina are being denied Medicaid, and some are going without medicines they need.

Local hospitals and doctors will often treat Katrina victims even if they can't pay. But this means that communities that have welcomed Katrina refugees will, in effect, be financially punished for their generosity - something local officials will remember in future crises. (The administration has offered vague, unconvincing assurances that it will do something to compensate medical caregivers. It has offered much more concrete assurances that it will reimburse religious groups that provide aid.)

What about housing? These days, both conservatives and liberals agree that public housing projects are a bad idea, and that housing vouchers - which help the poor pay rent - are much better. In the aftermath of the 1994 Northridge earthquake, special housing vouchers issued to victims worked very well.

But the administration has chosen, instead, to focus its efforts on the creation of public housing in the form of trailer parks, which have been slow to take shape, will almost surely be more expensive than a voucher program and may create long-term refugee ghettoes. Even Newt Gingrich calls this "extraordinarily bad policy" that "violates every conservative principle."

What's going on here? The crucial point is that President Bush has been forced by events into short-term actions that conflict with his long-term goals. His mission in office is to dismantle or at least shrink the federal social safety net, yet he must, as a matter of political necessity, provide aid to Katrina's victims. His problem is how to do that without legitimizing the very role of government he opposes.

This dilemma explains the administration's opposition to Medicaid coverage for all Katrina refugees. How can it provide that coverage without undermining its ongoing efforts to reduce the Medicaid rolls? More broadly, if it accepts the principle that all hurricane victims are entitled to medical care, people might start asking why the same isn't true of all American citizens - a line of thought that points toward a system of universal health insurance, which is anathema to conservatives.

As for the administration's odd insistence on providing public housing instead of relying on the market, The Los Angeles Times reports that Department of Housing and Urban Development officials initially announced plans to issue rent vouchers, then backed off after meeting with White House aides. As the article notes, the administration has "repeatedly sought to cut or limit" the existing housing voucher program.

This suggests that what administration officials fear isn't that housing vouchers would fail, but that they would succeed - and that this success would undermine the administration's ongoing efforts to cut back housing aid.

So here's the key to understanding post-Katrina policy: Mr. Bush can't avoid helping Katrina's victims, but he doesn't want to legitimize institutions that help the needy, like the housing voucher program. As a result, his administration refuses to use those institutions, even when they are the best way to provide victims with aid. More generally, the administration is trying to treat Katrina's victims as harshly as the political realities allow, so as not to create a precedent for other aid efforts.

As the misery of the hurricane's survivors goes on, remember this: to a large extent, they are miserable by design.